Total Factor Productivity in Brazil’s and Argentina’s Agriculture: A Comparative Analysis

We measure Malmquist index of total factor productivity (TFP) changes in the agricultural sector of Brazil and Argentina during 1971-2002. The TFP change index is further decomposed into efficiency change and technical change. We then compare the cumulative TFP growth and its components in both countries. Results show that agricultural TFP change as well as efficiency and technical change accelerated in Brazilian agriculture, where as Argentinean agriculture experienced a negative trend in TFP growth over the sample period. Efficiency change in Argentina’s agriculture was found to be stagnant over time. The increasing productivity in Brazil is due to strong policy reform in 1980s. Argentina’s imbalanced economy, including biased reforms explains the negative TFP growth and technical regress during this period.